"I hope that if there is willingness on the Palestinian side to build peace, to conduct negotiations to reach a peace accord, we will see a resumption of the peace process in the coming weeks," he added.

Al Jazeera's Jacky Rowland, reporting from Herzliya, said that Netanyahu's optimisim was not reflected on the ground.

"Certainly there's nothing of a tangible, actual nature that seems to be happening on the ground at the moment that would give any calls for such optimism.

"I think he made very clear the yawning gap between the Israeli and Palestinian position."

Netanyahu did not reveal the basis on which the talks would take place.

But George Mitchell, the US Middle East envoy, was in the region at the end of January. He met with leaders on both sides and presented a new initiative aimed at bringing the parties closer together.

At the time, Netanyahu spoke of "interesting ideas," but did not elaborate.

For his part, Mahmoud Abbas, the Palestinian president, said on Monday that he would give a response to Mitchell's proposal within a week.

'US suggestion'

A senior Israeli official told AFP the United States had suggested "discussions take place initially at the level of teams working on different subjects, before proposing confidence-building measures."

Such a strategy would pave the way for "normal discussions to resume," the official added, without elaborating.

Abbas has not dropped his demand that Israel halt all settlement growth in the occupied West Bank and mostly Arab east Jerusalem ahead of any talks, or his insistance on a framework of guidelines for the negotiations.

Talks came to an abrupt halt when Israel invaded the Gaza Strip in December 2008 in a brief but very deadly war.

The four-day conference in Herzliya that started on Sunday was attended mainly by Israeli officials to discuss politics and the state of the Israeli nation.

Salam Fayyad, the Palestinian prime minister, met Ehud Barak, the Israeli defence minister, in a conference session on Tuesday - the first meeting of senior officials from the two sides since the talks broke down.

The annual conference has gained a reputation over the years as a platform for announcement of new Israeli policies.